Criminal Due Diligence

With a business acquisition value influencing factors of the target company are routinely examined for the buyer by specialized civil law lawyers by means of a due diligence.
Also relevant criminal misconduct by existing management or sole owners can influence the organizations’ worth significantly. Thus for instance demands by the social fund or by the tax authorities due to the evasion and non-payment of social security fees and wage taxes through the connected –interest bearing – subsequent payment rights, can lead to erosions of the economic substance of the organization.

Similar applies for undiscovered bribery cases which can, after the execution of the actual purchase, through reputational damages, defence expenditures, compensation claims by business partners as well as administrative skimming of excess profit and organizational fines, turn into a losing bargain.

In today’s legal environment an examination of the target organization with respect to penal aspects should always be a key component of a proper due diligence. ECKSTEIN & KOLLEGEN can incorporate their penal expertise and further support the transaction by recording and evaluating penal risks when being part of a consultant team.